How long does a wire transfer take? | Process overview | Speed-affecting factors | Wire transfer fraud
⚡️ Key takeaways
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What is a wire transfer in real estate?
A wire transfer is a fast way to move funds electronically between one person or bank account and another, usually taking one business day or less.
You can typically do a wire transfer through your bank, or via a third-party wire transfer service, such as Western Union, TransferWise, or Xoom.
Wire transfers are common in real estate for three primary reasons:
- Speed: wire transfers are faster than other payment options, such as certified check.
- Convenience: transfers can be initiated online or over the phone.
- Security: electronic wire transfers don’t involve physical checks or cash, which makes them more secure (though instances of fraud and user error do happen, albeit rarely).
A great realtor will typically guide this process so your wire transfer for closing doesn't stall the selling process.
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How long do wire transfers take?
An individual wire transfer generally takes less than one business day, but in a real estate transaction, money has to flow through an "escrow account."
An escrow account is a third-party account that holds funds until the necessary contractual terms have been met. The escrow officer then disperses payments to the designated recipients.
As a result, getting money from the buyer to escrow to the seller actually takes two to four business days because there are two wire transfers involved.
Other factors that affect the speed of a wire transfer
When you initiate the transfer
Your wire transfer will take more than one day if you send it on a Friday or before a holiday, in which case it will be put on hold until the next business day.
The network(s) used to carry out the transfer
Which one of the three primary wire transfer networks is employed to facilitate your transfer also affects how long it takes.
- FedWire: Fedwire transfers money between institutions instantly, but it’s only used to send money between large banks that are part of the Federal Reserve’s banking network.
- CHIPS: Transfers sent via CHIPS will arrive within 24 hours of being sent, so long as they’re initiated before your bank’s daily cutoff time.
- SWIFT: SWIFT transfers take up to 24 hours. SWIFT is a popular option for banks because it can be used to transfer money between institutions that have no formal relationship.
Domestic vs. international
International wire transfers typically take between one and five business days.
If you’re wiring money from outside the U.S., you can almost guarantee that it will take longer than one business day to arrive, so plan accordingly.
The wire transfer process at closing
Most residential real estate transactions involve three important wire transfers:
- Buyer to escrow: The down payment and closing costs.
- Buyer’s lender to escrow: The loan amount needed to finance the purchase.
- Escrow to seller: The seller’s proceeds from the sale after all expenses are paid.
Before the seller gets paid, the escrow agent deducts the buyer’s agent fee, any closing costs that the seller agreed to pay, and any amount that the seller still owes on their mortgage.
Your real estate agent will be able to walk you through and help coordinate this process, but here’s an example of how this could play out in practice:
- After the mortgage loan has been approved, the buyer’s lender wires the funds to escrow.
- One to two days before closing, the buyer sends a wire transfer to escrow. The transfer includes the down payment, and any closing costs that the buyer hasn’t already paid.
- On closing day, all documents are reviewed and signed. The escrow agent settles funds by deducting closing costs for both sides, escrow fees, and any other costs that the seller agreed to pay.
- Finally, the funds are wired to the seller’s bank account after closing, so the seller is usually paid within 24 hours.
Note that every transaction is different and yours may play out differently — particularly if the buyer is paying cash or the seller is financing the deal. Working with an agent who knows the ins and outs of your situation can help you avoid delays.
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Transfer times in wet vs. dry funding states
The state that you’re buying or selling in may slow down the process of transferring funds out of escrow.
In a "wet" funding state, funds are released to the seller on the day of closing — while the ink is still wet on the closing documents, so to speak.
The opposite of this is a "dry" funding state, where three days must be allotted after closing for the deal to be reviewed. This additional time means that the seller won’t actually get paid until four days after closing by the time the wire transfer settles.
| Dry funding states | |
|---|---|
| Washington Oregon California Idaho |
Nevada New Mexico Arizona Hawaii Alaska |
Wire transfer fraud
Although wire transfers are generally very safe, wire transfer fraud in real estate can and does happen without the proper precautions.
In 2019, $221 million was lost to wire transfer fraud directly related to real estate transactions.[1]
Criminals target buyers by identifying properties with a pending sale and then phishing for information so that they can pose as either the title company, the buyer’s agent, or the escrow officer.
Using fake credentials, they email the buyer with new wiring instructions and urge them to send the money right away in order to avoid closing delays. Excited buyers sometimes follow the scammer’s instructions without verifying the details.
Unfortunately, when this misstep is discovered a few days later, it’s often too late for the money to be recovered.
Wire transfer safety tips
As a buyer, there are two very simple things that you can do to protect yourself from a wire transfer scam:
☎️ Confirm instructions over the phone. Because criminals use email to scam buyers with fake instructions, call your escrow officer to confirm the recipient’s account details. This will eliminate the possibility of sending money to the wrong person.
🚫 Never send a wire via online banking. Even if the instructions that you’ve received are legitimate, it’s best practice to start your transfer over the phone. This adds another layer of redundancy by giving you the assistance of a bank employee.
